Volkswagen to invest billions in US electric car company Rivian

German auto giant Volkswagen plans to invest up to $5 billion in the US electric car manufacturer Rivian in the coming years, both companies announced.

The partnership is expected to accelerate software development, Volkswagen announced in a statement after the US stock market closed on Tuesday.

Following the establishment of the joint venture, Volkswagen will have direct access to Rivian's electric car technology for implementation in its electric vehicles.

"Through our cooperation, we will bring the best solutions to our vehicles faster and at lower cost," Volkswagen Group chief executive Oliver Blume said.

"The partnership fits seamlessly with our existing software strategy, our products, and partnerships. We are strengthening our technology profile and our competitiveness."

Rivian founder and chief executive RJ Scaringe said the company was excited to partner with Volkwagen Group.

"Since the earliest days of Rivian, we have been focused on developing highly differentiated technology, and it's exciting that one of the world's largest and most respected automotive companies has recognized this," Scaringe said.

"Rivian was created to help the world to transition away from fossil fuels through compelling products and services, and this partnership is beautifully aligned with that mission."

The Volkswagen Group will invest an initial $1 billion in Rivian, with a planned additional investment of up to $4 billion, bringing the total expected deal size to $5 billion.